Brazil’s State Governors Try to Resolve Financial Crises

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazil’s President Michel Temer met with state governors on Tuesday, November 22nd, to try to find a solution to the financial crises faced by many Brazilian states. The federal government agreed, in addition to giving states a share of the money obtained with the repatriation of Brazilian resources abroad, to also share with the states the fines paid on those assets.

“The resources of the fines will be shared with states and municipalities, just as it was done with the tax. Our commitment, in return, is that we continue with our fiscal adjustment, balance public accounts, and strongly support the federal government’s pension reform,” Santa Catarina state governor, Raimundo Colombo, told journalists as he left the meeting.

According to the federal government, state governments will already divide approximately R$5.2 billion of the R$46.8 billion obtained through the repatriation program, not including fines. The total volume of fines to be distributed to the states will only be known at the end of the year, according to Finance Minister, Henrique Meirelles.

According to the G1 website, of the 27 states in the Union, twenty are in the red with public debts totaling over R$56 billion. The crisis has led to the reduction of social services and delays in state employee payrolls.

Rio Grande do Sul state, for example, was the second state in the last six months to declare financial emergency in its economy. With the emergency, Rio Grande do Sul will adopt measures which include the closing of eleven government agencies and the layoff of up to 1,200 state employees.

In June, with a little more than a month before the Olympics and Paralympic Games the state of Rio de Janeiro declared financial emergency, receiving federal aid to pay off their security agents before the sports events.